Mortgage Chaos Looms: Millions of Homeowners Brace for Rate Hikes in Unstable Market
Over 1.8 million UK households will see their mortgage costs rise this year.
This warning comes as lenders react to ongoing market troubles. Experts are urging homeowners to carefully review their mortgage options.
Virgin Money has already raised rates on several fixed mortgages this week, suggesting changes in the market. Santander has also hinted at small price increases due to instability in the bond market.
Santander UK’s chief economist, Frances Haque, said: “This month, swap rates are rising because of uncertainty in the economy for 2025, both in the UK and internationally.”
Data from Moneyfacts shows significant differences in mortgage rates. Standard variable rates (SVRs) average 7.81%, much higher than other options. A five-year fixed-rate mortgage averages 5.25%, while a two-year tracker mortgage averages 5.47%.
Experts warn that staying on an SVR could be expensive, as these rates often stay high even when interest rates drop. Tracker mortgages, which follow the Bank of England’s base rate, may be a cheaper alternative.
David Hollingworth, a director at L&C Mortgages, advises reviewing your mortgage rate early. This gives you time to switch smoothly to a better deal. He also recommends seeking advice to find the best rates and minimize extra fees.
